Property speculators should get on their bike

Those who flipped properties in the UAE are as guilty as developers for the state of the market
Property speculators should get on their bike
By Anil Bhoyrul
Sun 22 May 2011 11:30 AM

Everyone likes to put the boot into people we don’t know. On this website, there is no shortage of self-styled experts passing commentary on a host of subjects, usually by giving false email addresses. The first whiff of a scandal, and I can predict with 100% accuracy the first 50 readers who will comment on it — what really happened, who is really guilty, and why they deserve to spend the rest of their lives behind bars (at the very least).

And so to Kabir Mulchandani, the former boss of Dynasty Zarooni. He knows this better than most, having spent 140 days in a Dubai cell accused of multiple fraud. His fall from grace made headlines around the world — some in the media described him as the “Madoff of the Middle East”, while thousands more decided to blog on various websites to explain “how he did it.”

The thing about Mulchandani — and it is something that has received remarkably little media attention — is that earlier this year he was cleared of every single charge brought against him, by three separate courts in Dubai.

Boring as this may sound, he didn’t do it. In a frank interview in this week’s issue, he goes into the details of the cases against him, and the lengthy battle to clear his name.

Two things about his case really stand out. Firstly, that despite the recent wave of negative publicity, the Dubai legal system works. Mulchandani was quizzed for eight hours a day for 40 days running while in custody – a total of 320 hours. Prosecutors did not assume he was guilty. They looked into every allegation, every detail and every piece of evidence, all of which was presented to the courts which unanimously cleared him. Justice was ultimately done.

It is reassuring to see that, against a backdrop of high profile cases and a public desire to see corruption rooted out, those who are innocently caught in the storm are treated fairly, and if not guilty, released.

Secondly, the case against Mulchandani was brought by a handful of his former customers — property speculators who owed him huge sums of money and had their post-dated cheques bounce (as a result of the financial crisis).  Rather than face the music, they went after Mulchandani, collectively claiming they didn’t actually owe him the cash because he was running a fraudulent scheme in the first place.

The police were right to investigate such claims, but having now exonerated Mulchandani, what about the property speculators? These guys made fortunes by flipping properties. Suddenly, come the global financial crisis their cash ran out and they couldn’t meet their financial obligations on properties they had bought. So they cobbled up a story that lands an innocent man in jail.

Yes, there have been some dubious property schemes in the last few years, and yes there are many innocent buyers who have fallen victim.  But there’s nothing easier than blaming developers. The fact is this: if you bought a property off plan, in the hope of getting very rich very quick, it’s your job to come up with the cash to pay for it in the first place. If you can’t, then every fault of the developer (of which there are many) is a secondary issue.

Speculating on property is not illegal. It is an art that feeds on the wheels of greed. But when the tyres go flat, as they did in 2008, it is time to get on your bike.

To be fair to Mulchandani, he isn’t now going after the speculators who so nearly brought him down, telling us, “I don’t need this bad energy in my life.”

The way he has started rebuilding his empire and reputation, with dignity and without a desire for vengeance, is a lesson to us all.  Today he walks tall, his head held high. The same cannot be said of his accusers.

Anil Bhoyrul is the Editorial Director of Arabian Business.

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